State Could Get $90 Million From Oil Overcharge Case

July 13, 1986|by TIM DARRAGH, The Morning Call

Just a few months after Pennsylvania received $96 million of the $2billion Exxon Corp. paid to the federal government for illegally overcharging for its oil, the state stands to receive an additional $40 million to $90 million from another overcharge case.

That represents another victory for consumers, especially poor families, who should be able to use at least a portion of the state's money to help pay their heating bills and insulate their homes.

Judge Frank Theis of U.S. District Court in Wichita, Kan., last week ruled against a number of oil companies and agreed with the U.S. Department of Energy, which alleged that the oil producers charged excessive prices for oil taken from "stripper" wells.

The total amount of the settlement may reach $4 billion.

"We were not completely happy with the terms of the settlement, but we are happy that low-income people should get a reasonable share of the funds," said Helen C. Gonzales, staff attorney for the National Consumer Law Center in Washington, D.C.

If the money is released soon, it could not come at a better time for the Lehigh Valley, as officials at the Community Action Committee of the Lehigh Valley (CACLV) say they have a long line of applicants for its home weatherization program. In addition, a record number of Lehigh Valley families received fuel assistance during the past heating season.

Gonzales noted that the terms of the settlement were not entirely clear last week but said the court in effect accepted a proposed settlement to which the center contributed.

The proposal called for some of the money to go to major purchasers, refiners (for an unrelated case), the federal government and the states. In a letter Gonzales said, "The federal government will be under no obligation to use these funds in a way which would benefit consumers who paid higher energy bills because of these price violations."

These are the conditions, she indicated, that did not please advocates for low-income people.

"The states, however, will be required to return the benefits of these funds to the general population that bore the overcharges in the first place," she continued. "Hence, the monies must be spent on energy-related programs . . . and must be used to supplement, not supplant, existing federal and state resources."

She said $2.45 billion will be divided among the states, based on a formula that determines the past damages.

Gonzales said that provision also gives the states wide latitude to spend the overcharge money on projects that "seem to go far afield from the energy burden borne by consumers." But the center was able to negotiate an agreement that would mandate that the states use "an equitable share" of their funds to low-income programs.

She added that it is unclear when all the money will be released, but that between $660 million and $750 million should be distributed immediately.

"There were a lot of folks who were concerned about the agreement," said Otto Hoffman of the Pennsylvania Utility Law Project. "They didn't like putting (the federal share) in the U.S. Treasury instead of in a program that would have a more direct impact on consumers."

Hoffman, who said he has heard that the state will receive between $40 million and $90 million from the settlement, said that in his opinion, "It works out to everyone's advantage" to settle the case and get the money to programs for poor people.

CACLV Executive Director Sandy Murphy said the agency is joining other agencies throughout Pennsylvania in lobbying the state Legislature to direct the state's share to low-income weatherization and fuel-assistance programs.

"I think we've seen some progress," she said.

Murphy also said the agency has a "very large waiting list" for the home weatherization program. Further, she said, "We're still seeing a record number of people for energy assistance programs."

She said 2,172 area households received fuel assistance through the CACLV in the last heating season, an increase of about 500 homes from the previous season.

Part of the reason - but only part - for the continued and dramatic increase, she said, is increased awareness of the programs among poor families.

"Every year, we feel there can't be much more," Murphy stated, "but every year, there are more and more families that are becoming eligible for the programs."

In the meantime, Gov. Dick Thornburgh on Thursday signed a bill creating a system to spend the overcharge money recently awarded to Pennsylvania.

However, the governor said some changes must be made before all the funds can be appropriated.

Thornburgh signed the bill to free $35 million that can be spent on weatherization, energy conservation and heating assistance in 1986-87.

The governor said an additional $5 million can't be spent, because provisions in the legislation don't conform with federal rules for spending the money. He said the legislation will have to be amended when the General Assembly returns to the Capitol in September.

Thornburgh spokesman David Runkel said the governor specifically objected to a separate $5 million being earmarked for the Pennsylvania Solid Waste Resource Recovery Development Fund. Thornburgh said that can't receive money under the federal rules.

Bob Priest, a budget analyst for House Democrats, said federal rules would allow waste-to-energy projects, the kind of projects that would be financed from the resource recovery fund.

Thornburgh also objected to "extensive and potentially expensive new bureaucratic requirements" for a Department of Community Affairs program that helps weatherproof homes of the needy.